3 Stocks That Thrive on Fear, Pessimism

BOSTON (TheStreet) -- Corporate profits are soaring, but that's not enough for investors. S&P 500 companies boosted second-quarter earnings by 34%, analysts surveyed by Bloomberg estimate, and almost two dozen will publish results this week. Investors, ultimately, are concerned about a double-dip recession. Here are three stocks that thrive on fear. They have outperformed stock-market indices in 2010 because they operate in industries that tend to do well regardless of the economic climate. 3. Vector Group VGR sells cigarettes. Quarter: First-quarter profit nearly quadrupled to $12 million, or 15 cents a share, as revenue increased 27%. The operating margin declined from 31% to 28%. Vector has $265 million of cash and $365 million of debt. It is running a shareholders' deficit. Stock: Vector has gained 28% in 2010, outperforming the S&P 500 Index by 32 percentage points. It trailed the benchmark in 2009. Vector trades at a trailing price-to-earnings ratio of 40, a 183% premium to its peer average. It's cheap based on sales. Consensus: No analysts cover Vector, which has market value of just $1.3 billion. Vector pays a quarterly dividend of 40 cents. At its current price, the stock offers a lofty dividend yield of 9%. However, the stock's payout ratio of 356% is dangerously high. 2. Family Dollar Stores FDO sells discounted apparel, foods and household products. To read the rest, head over to Market News and Data brought to you by Benzinga APIs

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